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What is CAC 40 and What Influences its Price?

What is CAC 40 and What Influences its Price?

Ben Lobel, Markets Writer

The CAC 40 is the main French stock market index that features the most prominent businesses in the French economy. Keep reading to find out more about the CAC40 index, its history, the 40 companies that constitute it and how to start trading it.

What is the CAC 40 Index?

The CAC 40, or CAC Index, is one of the world’s major stock indices and lists the 40 largest companies by market capitalization on the Euronext Paris, France’s largest stock exchange. France represents around a fifth of the total economy of Europe, so it is important for traders to follow the CAC 40 index to ascertain where the European economy is heading.

The CAC 40 index composition is reviewed quarterly by an independent steering committee. At each meeting, 40 companies are chosen according to the value of their regulated turnover from the prior 12 months and their free-float adjusted market capitalization.

What are the CAC 40 companies?

The CAC 40 companies are composed of the likes of oil giant Total, tire colossus Michelin, and insurance juggernaut AXA. As of February 2020, the composition of the entire index is as follows:


Air Liquide





BNP Paribas




Crédit Agricole


Dassault Systèmes










Pernod Ricard







Schneider Electric

Société Générale










History of the CAC 40

The history of the CAC 40 begins in 1987, when its base value of 1,000 was set on December 31. Since then, the index has broadly mirrored the rises and falls of other global major stock indices, rising rapidly towards the end of the 20th century with the culmination of the dot-com boom to a peak of 6,922, falling to below 2,700 in March 2003 in the ensuing bust, and rebuilding to above 6,000 in 2007.

The Great Recession saw the subprime mortgage crisis in the US spread to global markets. Unlike other indices such as the S&P 500, the stock market boom that followed the 2007-08 financial crisis failed to see the CAC 40 surpass its all-time high it enjoyed during the dot-com years.

The following chart shows the history of the CAC 40 in the 21st century, highlighting the major fundamental events that shaped its price.

CAC 40 price history and reasons for fluctuations

What Affects the Price of the CAC 40?

The CAC 40 price is moved by the share price of its constituent companies. Some of the most influential drivers of the index are:

  • Commodity prices: For example, any changes in oil price is likely to hit the share price of oil and gas giant Total, one of the biggest French companies by market capitalization, and in turn move the wider index.
  • Economic events/economic performance: Any event that affects political backdrop, such as elections, can hit the index. In 2017, this was seen in the presidential election when the CAC 40 would fluctuate depending on how Le Pen or Macron were doing in the polls. Also, in times of growth and high employment, consumer spending may rise, buoying certain stocks.
  • Central Bank Policies: European Central Bank policies can affect borrowing costs and spending patterns by businesses and consumers in France.
  • Currency Valuations: The CAC 40 is particularly sensitive to Euro fluctuations as it is the index with the most multinational corporations in Europe, as well as having a large amount of foreign investment. A strong Euro makes it cheaper for French companies to buy imports from outside the Eurozone, while a weak Euro means French exports will be more competitive in those areas.

Reasons to trade CAC 40

  • Liquidity: CAC 40 is a liquid market with high trading volume, meaning traders should mostly be able to enter and exit trades with a minimum of slippage. Read more on the benefits of stock market liquidity.
  • Volatility: Macroeconomic releases and fundamental drivers such as oil prices can move the CAC 40 price quickly, meaning significant opportunities – but also risks – for those in the know. Read more about the nature of stock market volatility.
  • Proxy to European economy: The CAC 40 Index can provide an insight into the Eurozone’s financial health when read in conjunction with other European indices such as the DAX 30 and IBEX 35.

Further reading on CAC40

Follow the live CAC 40 price with our interactive price chart, and keep up to date with the latest CAC 40 news and analysis. Our analyst articles offer in-depth insights on the CAC index and its constituent stocks to inform your trading.

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